Have you just purchased your own apartment? Or perhaps you’re simply looking into making this major purchase and became aware of strata management fees. Regardless of which exciting boat you find yourself in, it’s time to acquaint yourself with strata fees. A strata scheme is a system that handles the legal ownership aspect of a building. In essence, this means, you share a building with the other tenants and together you make up ‘the owner’s corporation’ making you responsible for the maintenance of the shared communal areas.
So, where exactly are these communal areas, how much are strata fees, and how high will strata rates be? Here, we break down what exactly strata management fees are, and how you can better understand your strata fees.
A Break-Down Of What Are Strata Management Fees:
- What Are Strata Fees?
- What Kind Of Strata Fees Are There?
- Rental Yield and Rent Prices
- Strata Fees Are Often Lower For Townhouses
- How Much Are Strata Management Fees And Do You Pay For Strata Fees When You’re Renting?
What Are Strata Fees?
Strata fees are regular payments issued by owners/tenants to collectively maintain strata-titled properties, which include condominiums, apartment buildings or townhouse body corporate areas. The strata rates or fees in Victoria, vary depending on individual factors such as the property size and the facilities at hand. However, strata laws are different in surrounding states, to ensure strata standards are being met to uphold common areas of the property.
What Kind Of Strata Fees Are There?
So, what do your strata fees actually go towards? To break it down, strata management fees falls into three different categories, administrative fund levies, sinking fund levies and special levies. Here, we break down exactly what that means and what strata rates you’re paying your body corporate management for.
Administrative Fund Levies
The administrative fund levies aspect of the strata scheme refers to the daily costs that your body corporate fees would contribute to. This includes such maintenance as gardening and cleaning, as well as minor repairs that are needed around the communal areas of the building. This fee doesn’t tend to change much, however as prices increase yearly, they will steadily increase.
Sinking Fund Levies
The sinking fund levies tend to cover larger expenses. These can fall into two different categories. Firstly, there are anticipated costs, such as building wear and tear, like repainting walls, fixing a broken roof or replacing old carpets. But, then there is the second category for which your strata management fees cater, these are the unanticipated expenses. However, if your building is new then there usually won’t be many unexpected repairs that arise.
Finally, there are special levies. Whilst the sinking fund is there to generally fund larger expenses and a few unanticipated repairs, there are of course issues that it doesn’t cover. Paying this fee is likely the least popular as people tend to prefer to only pay for things that they know need attending. But if there is an additional problem that urgently needs attending to, it’s better to have the money to fix it in advance, rather than be unprepared and just let the issue grow larger than necessary.
Rental Yield and Rent Prices
According to the REIV, the median rent in Metro Melbourne as of the end of March 2021 was $480 per week; giving a rental yield of 2.7%.
The data as presented by the REIV also shows that the number of bedrooms is a large factor when it comes to the rent that investors receive and that tenants are willing to pay:
|Median rent by Bedrooms||Metro|
Strata Fees Are Often Lower For Townhouses
The biggest factors in how much strata rates or (body corporate fees) are the extent and types of common facilities and amenities (the lifts, pools, shared garage doors, essential services equipment, caretaking, gardening, building insurance etc.).
|Average estimated selling price||Average weekly lease||Estimated owners corporation||Depreciation benefits|
Body Corporate Fees / Owners Corporation Fees / Strata Rates
How Much Are Strata Management Fees And Do You Pay For Strata Fees When You’re Renting?
The good news for renters is that you will not be paying any Strata fees, these are paid exclusively by the owners or part owners of the building. In terms of cost, there is no set payment. Whilst you can break down what your payment will be going towards, there is no concrete number. Strata cost is dependent on a number of factors such as the location and size of the property, as well as the location. As well as this, if your apartment complex has more amenities such as a communal gym or pool, your fees will be higher as they will go towards these luxuries that your building houses.
Whether it’s simply to maintain the outdoor area of your building or to manage unprecedented damage, paying your levies is an essential contribution to keeping your apartment complex up to a high standard of maintenance. These fees are an investment in your home and your lifestyle and will maintain the value of your building as time goes on, so they are an incredibly worthy cost for you to contribute towards.
If you want to know more about our strata consulting services, strata management fees or what are strata fees? Get in touch with Strata Management Consultants. As one of Victoria’s most trusted strata management companies, our friendly and experienced staff are on hand to answer any questions you may have. Contact us today at our website, or call us on 1300-917-848.